Withdrawal limits to increase New notes, coins in two weeks
THE Reserve Bank of Zimbabwe (RBZ) will introduce new bank notes in the next two weeks and increase withdrawal limits as it moves to tackle biting cash shortages and ease the burden on the transacting public.
The new notes will be introduced in denominations of $2 and $5 as well as $2 coins to avoid larger denominations that may lead to inflation, RBZ Governor, Dr John Mangudya, said yesterday. He revealed this following the inaugural Monetary Policy Committee (MPC) meeting on Monday and Tuesday, which tabled a number of resolutions aimed at consolidating the recent country’s monetary policy reforms.
Dr Mangudya said the new bank notes and coins will be pegged at 1:1 with bond notes in terms of value and that cash supply will be increased over the next six months.
“We agreed to increase fiscal cash in circulation from current $768 million to a level, which is commensurate with the rest of the world. Currently our money supply is $19 billion. Our money in circulation, which is notes and coins, is about four percent. Internationally what is pertaining is about 10 to 15 percent,” Dr Mangudya told journalists in Harare.
“We want to ensure that this economy has enough cash. Over the next six months, from the next fortnight, we will be putting money into the economy, physical cash of up to 10 percent, we are going to spread it across six months. 10 percent of the $19 billion is $1,9 billion minus the $800 already on circulation, it means we will be feeding $1,1 billion dollars over the next six months into the economy.”
The new notes and coins will not be called bond, he explained, “It’ll just be called dollars” and will be 1:1 with the bond notes. “Coupled with this, we are also reviewing withdrawal limits up,” said Dr Mangudya who revealed that the new monetary committee was seriously concerned about the shortage of cash in the economy. As such he said additional cash injection will be carried out through the noninflationary exchange of RTGS money for physical cash.
Persistent cash shortages have induced a severe strain on the transacting public as it became a breeding ground for a thriving parallel market, which has seen cash being sold at premiums of up to 60 percent. Consumers have also endured the pain of a multi-tier pricing system, also informed by cash shortages and speculative market distortions. The scenario also pushed businesses to the corner amid price escalation and the rising cost of doing business, which spiked further following introduction of Zim-dollar in June this year.
Dr Mangudya said the bank was seized with formalising the process and satisfying the legal requirements before introducing the new bank notes, which includes advertising the notes’ specimen prior to official use. In its comprehensive press statement after the two-day meeting, the RBZ Monetary Policy Committee (MPC) noted a number of issues that require urgent implementation for attainment of macro-economic stability and sustainable development.